NY AG James Bans Celsius Founder Alex Mashinsky, Secures Up to $35M

New York Attorney General Letitia James announced a settlement securing up to $35 million from Alex Mashinsky, co-founder and former CEO of collapsed crypto lender Celsius Network, alongside a permanent industry ban ¹. The resolution prohibits Mashinsky from engaging in the securities, commodities, and cryptocurrency sectors in New York ¹. The enforcement action follows a 2023 lawsuit alleging that Mashinsky defrauded hundreds of thousands of investors—including more than 26,000 New York residents—by misrepresenting the safety and investment strategies of Celsius before its collapse ¹.

Under the terms of the settlement, Mashinsky faces contingent financial penalties totaling $35 million ¹. He must pay $25 million to New York if he fails to forfeit $10 million in proceeds to federal authorities under an existing criminal plea agreement, and an additional $10 million if he fails to serve his entire 12-year federal prison sentence ¹. Federal authorities had previously ordered Mashinsky to forfeit more than $48 million, and he is currently incarcerated under a 12-year sentence resulting from a parallel criminal prosecution ¹.

Bankruptcy Distributions and State Oversight

The Office of the Attorney General noted that Mashinsky falsely marketed Celsius as safer than traditional banks while concealing steep losses generated by speculative investment plays ¹. The resolution comes after broader recovery efforts across the lender's estate, with Celsius creditors receiving over $3.4 billion through bankruptcy distributions as of August 2026 ¹. Separately, Celsius executives paid $16.5 million to resolve claims from the Federal Trade Commission ¹.

The enforcement action extends New York's persistent scrutiny of digital asset operators under state securities and anti-fraud statutes ¹. Similar regulatory crackdowns on fraudulent operations have resulted in major financial penalties across jurisdictions, including when the SEC secured over $5.7M in final judgments against BitConnect promoters. Attorney General James reiterated that the office continues to pursue digital asset firms that mislead retail depositors ¹.